Trump's Trade War Ravages Two of the Most-Volatile Tariff Stocks

President Donald Trump’s so called "trade war" with China has broader equity markets running scared and is wreaking havoc on aluminum and steel stocks.

Century Aluminum Co. and United States Steel Corp. are two of the most volatile stocks among tariff-exposed companies and are underperforming their peers as Trump orders to levy tariffs on about $50 billion in Chinese imports.

Century Aluminum and U.S. Steel have a beta above 2, meaning they are twice as volatile when compared to the returns of the S&P 500 Index, and therefore, could be seen as riskier stocks. They are also heavily traded with tariff news since they have significant U.S. operations. Talks of tariff exemptions for certain countries led these stocks to decline in recent trading sessions, as expected benefits from protectionist policy would be fewer. Prospects dimmed further on Thursday, as U.S. Trade Representative Robert Lighthizer said the U.S. will shield a list of allies including Europe, Australia, South Korea, Argentina and Brazil from steel and aluminum tariffs that take effect on Friday.

Some analysts have voiced concern over pricing amid tariff uncertainty. It’s hard to see steel U.S. hot-rolled coiled prices rising in the near-term given the unpredictability of import tariff exemptions, Cowen analyst, Novid Rassouli, wrote in a research note to clients.

The 14th annual Platts Steel Conference this week had an extremely positive tone on the U.S. steel market, however, the concerns were focused on China as well as the lack of clarity around Section 232, Rassouli added.

Other notable moves within the materials sector:

Commercial Metals fell as much as 11 percent after its second quarter adjusted Ebitda missed lowest analyst estimate.

Kaiser Aluminum was among least affected stocks within aluminum sector, down as much as 2.7 percent.

Precious metals and copper are taking a hit as well, making Freeport-McMoRan among one of the worst performers.